Today is the 37th anniversary of Zimbabwe’s independence.
January 27, 2017
Food Security Situation
- Based on the July 2016 Zimbabwe Vulnerability Assessment Committee findings, an estimated 4.1 million people will be food insecure during the peak of the next lean season in January to March 2017. Global acute malnutrition is at 4.4 percent, and 1.9 percent of the population is suffering from severe acute malnutrition.
- Poor seasonal rains, reduced agricultural production and labor remittances, lack of purchasing power and high food prices are adversely impacting household food security in Zimbabwe. These factors are compounded by ongoing political instability.
- According to the Famine Early Warning Systems Network (FEWS NET), many areas in the south of the country were already facing significant survival food deficits in June and July that are not usually typical until September or October. Much of the south is experiencing Crisis Integrated Phase Classification (IPC) 3 food insecurity due to lack of production, livelihood options, and access to food. Poor households in northern Zimbabwe have been experiencing Crisis IPC 3 since October as they finish their food stocks and continue to face limited livelihood options for income. The food security situation is expected to worsen during the peak lean season period (Jan-Mar 2017) and the worst affected areas will experience Emergency (IPC Phase 4) outcomes. Traditional cereal-surplus producing areas in the Mashonaland Provinces will continue to be Stressed (IPC Phase 2).
Food Assistance Programs
- The Office of Food for Peace (FFP) is partnering with the UN World Food Program (WFP), World Vision, Cultivating New Frontiers in Agriculture (CNFA) and UNICEF to provide lean season food assistance to address immediate food needs in Zimbabwe. FFP is also supporting food for asset activities to increase households resilience to shocks and gradually offset their need for seasonal food assistance. In FY 2016, USAID has contributed over $80 million in emergency food assistance supporting drought-affected populations.
- FFP supports two five-year development programs through World Vision and CNFA in four provinces of Southern Zimbabwe. These programs seek to improve the nutritional status of children under five, expand and diversify agricultural production, increase household income, and help communities prepare for disasters through disaster risk reduction activities. In response to the drought from El Niño, FFP has supported these development partners to expand food rations and to support the creation of dams and irrigation schemes through food for assets activities.
Food for Peace Contributions
|U.S. Dollars||Metric Tons|
|Fiscal Year 2017||$12.8 million||15,137 MT|
|Fiscal Year 2016||$88.2 million||55,150 MT|
|Fiscal Year 2015||$44.5 million||24,130 MT|
Fiscal Year 2017 Contribution Breakdown:
|U.S. Dollars||Metric Tons|
|Title II Development||$2.8 million||3,080 MT|
|Title II Emergency|
|Emergency Food Security Program (EFSP)||$10.0 million||12,057 MT|
Food Security Situation information is provided by FEWS NET as of December 2016.
Dr Mick Gammon wrote the following in the magazine The Rhosarian (October 2009):
“The United Nations Food and Agriculture Year Book of 1975 ranked the then Rhodesia second in the world in terms of yields of maize, wheat, soya beans and ground nuts, and third for cotton. In the combined ranking for all these crops, Rhodesia ranked first in the world.
“Rhodesia’s Virginia tobacco was rated the best in the world in yield and quality, while maize entries in world championships were consistently placed in the first three slots. The world’s largest single citrus producer was developed early in the country’s history.
“Rhodesia was the world’s second largest exporter of flue-cured tobacco. This together with exports of maize, soya beans, cotton, sugar, coffee, tea, fruit, vegetables, flowers and beef made agriculture the major source of foreign currency. Agriculture contributed more to the gross domestic product than any other industry. It was the largest employer of labor, providing employment for about a third of the total labor force.”
The story of the effect these farmers had on the social welfare of their labour and beyond is nothing less than inspiring. But the deficiencies of those who wanted power at all costs, destroyed the breadbasket of Africa.
The period between 1967 and 1972 was a time that witnessed massive growth in the Rhodesian economy, despite stringent sanctions imposed upon the Smith regime.
By superadministrator1 The sanctions, initially imposed by Britain and subsequently the UN, were meant to cripple the country economically and thus force the Ian Smith regime to step down. They instead heralded the start of a highly successful industrial drive that was to see the Rhodesian currency and economy firm to record highs.
The way in which Rhodesia prospered under sanctions has often been used to ridicule the present Zimbabwean government over their claims that the so-called “smart sanctions” are what have brought the economy to its knees. During the Rhodesian-era, the sanctions were total, and in theory Zimbabwe was not supposed to have anyone trading with it whatsoever. In practice, the Rhodesians became adept at creating sanctions-busting measures that enabled them to source limited essentials from outside, as well as export some of their produce.
Two weeks ago, this column pointed out how the Government of that time and the business sector closed ranks in the face of this external threat, and how that close cooperation resulted in the build-up of elaborate business linkages across all sectors of the economy. These linkages are the ones primarily credited with the strengthening of the economy that then resulted.
If sanctions are meant to be damaging to an economy, why then did the Rhodesian economy thrive? The answer lies in the way the government reacted, the dynamics of economies and the power of synergy. Instead of precipitating economic demise, the sanctions and more importantly the reaction to these actually created an environment conducive for economic prosperity.
Prior to declaring The Unilateral Declaration of Independence (UDI), the Smith regime had been warned of the consequences that would result in the event that they went ahead with this action. They were fully aware that the country would be blockaded, so they made plans to transfer most of their foreign currency reserves to South Africa, a friendly country. They also began planning around the issue of how they could become self-sufficient and reduce dependence on imports. By the time UDI was undertaken, they had made significant progress in this direction.
A key action that the government took was to set up an exchange control regime that allowed government to direct how the country’s foreign currency reserves would be used. Government then deliberately targeted these reserves towards capital expenditure meant to enhance the country’s industrial capabilities, primarily in the area of import substitution. In the next few years, the government was at the forefront of setting up manufacturing companies which would then be sold to the private sector when the entities’ viability had been established. The Industrial Development Company (IDC) was a key vehicle for this activity.
The closing up of the economy created a ‘greenhouse effect’ on capital, in that capital within the country was locked up, and had to be redeployed locally. Capital was re-invested in expansion projects in the fields of energy, housing, manufacturing, farming and mining. As such projects came to maturity they in turn resulted in even more capital being available for redeployment, creating a vicious expansionary cycle. The closed borders and financial system was therefore conducive for the rapid expansion of the economy through the money multiplier effect.
Because of the close-knit cooperation between the various key players within the economy, cross-sectoral linkages emerged within the economy that aligned the operations of the various sectors. The financial services sector, awash with cash would finance farmers through providing loans for the acquisition of inputs. The farmers would produce and the products would be directed towards various marketing boards which would then on-sell product either to local markets, or would organise sales to external markets through various schemes set up to evade the sanctions.
In a nutshell, what the government managed to do was create a national economic system that was well-aligned and geared to create massive synergies for the economy as a whole. This system was said to be over 70 percent self-sufficient, meaning that the country only needed to import about 30 percent of its requirements.
Looking at our situation now, the differences are glaring. The smart sanctions did not, and do not create the sort of barriers that result in an internal pooling of capital. In fact, post-dollarisation there are no exchange controls whatsoever, and therefore capital is free to leave at any time. The political and economic dynamics currently at play actually encourage such a flight of capital.
Government has not taken a leading role in directing the economy, as politicians are currently pre-occupied with who is in power, rather than getting the economy to perform. Its relationship with the private sector has become more symbolic than anything else, and government policies more often than not do not have the direct input of the private sector. Furthermore, implementation, monitoring and evaluation are practically non-existent.
The business sector has also become fragmented, with each company focusing solely on its own survival. There are thus no synergies to talk of even among companies sharing a common value chain, let alone cross-sectoral synergies. As an example, most companies right now would rather import a raw material than source their product from a fellow local company. While there may be arguments about price, quality and the fact that we are in a free market, this myopic approach becomes laughable when those same companies call on citizens to “Buy Zimbabwe”.
Much as open markets are the right instrument for creating a competitive business environment, the importance of scale and synergies in achieving price competitiveness cannot be underestimated. Our industrial productive capacity stagnated for two decades after independence, before becoming decimated during the hyper-inflationary era. To think that we can just emerge from such circumstances and immediately take on a world that has been innovating all that time is wishful thinking. Zimbabwe simply does not have any industries that are scaled up to the levels at which other operations worldwide are operating, at the moment.
The concept of synergy is even more interesting. One definition of synergy is: “a situation where the whole is greater than the sum of its parts”. In other words, one plus one equals three or four, and not two. Synergies arise when separate units or systems are made to function in a way that results in output greater than either unit could have achieved on its own.
The impact of a lack of unity was amply demonstrated by the manner in which industrial capacity utilisation went up in the first couple of years after dollarisation, then stagnated and now seems to be falling. The reason why capacity utilisation stagnated was because uptake of local products was compromised as people began preferring imports. Currently, several manufacturers are closing down production and instead becoming distributors of imports.
Achieving a sustainable turnaround of the economy requires that all players focus on re-generating the linkages and synergies that once made this country extremely competitive. Land reform will not become truly successful before the financial and manufacturing sectors come on board and join hands with the farmers. Neither will the drive for industrialization. Economies, like all man-made systems, do not simply heal and align themselves without active effort. Until hands are joined and concrete ideas on national economic regeneration are made, we can forget about expecting a turnaround.
– Farai Mutambanengwe is the founding chairman of the SME Association of Zimbabwe, and managing director of Adway Financial Services (Pvt) Ltd. He can be contacted via http://www.adway.co.zw